TORONTO - Nortel Networks Corp. has reported a second-quarter net loss of US$113 million in a "challenging business environment," compared with a year-ago loss of $37 million.
The Toronto-headquartered telecommunications equipment maker, reporting in U.S. dollars, said Friday its revenue was up two per cent from a year earlier at $2.62 billion.
The latest quarter included $67 million in restructuring charges and $21 million in mark-to-market losses on interest rate swaps, partly offset by a foreign-exchange gain of $34 million.
Orders in the quarter totalled $2.15 billion, down from $2.68 billion a year ago, "primarily impacted by lower CDMA orders in North America and lower orders from the LG-Nortel joint venture," the company stated.
However, "We continue to see strong customer momentum in key growth areas of our business," commented CEO Mike Zafirovski.
The net loss was worth 23 cents per share, compared with a year-ago loss of seven cents per share.
Excluding one-time items, the April-June loss was 11 cents per share. Analysts were on average expecting a loss of four cents per share on revenue of $2.5 billion, according to Thomson Financial.
The second quarter represented an improvement from Nortel's first-quarter loss of $138 million, "demonstrating continued progress against the company's financial targets," the company stated.
"In the second quarter, the company focused on the work at hand and improved productivity, stepped-up cost reduction activities and enhanced margin performance," Zafirovski said.
"We delivered gross margin of 43.1 per cent, the seventh consecutive quarter of year-over-year improvement."
Nortel said the improvement from its year-ago gross margin of 41.1 per cent came "primarily from customer mix, due to the recognition of higher-margin deferred revenues, and cost-reduction initiatives, partially offset by the negative impacts of price erosion and product mix."
Nortel held $3.07 billion in cash at June 30, after a $74-million outflow during the quarter.
The $2.62 billion in April-June revenue was up from $2.56 billion a year ago but down from $2.76 billion in the first quarter of this year.
Revenue in Nortel's carrier networks business, the company's largest segment, was down two per cent from a year earlier at $1.04 billion.
But sales rose three per cent to $610 million in enterprise solutions, nine per cent to $536 million in global services, four per cent to $378 million in metro ethernet and five per cent to $60 million in other businesses.
Selling, general and administration expenses were trimmed by three per cent from a year ago to $575 million, while research and development spending rose four per cent to $441 million.
The company maintained its previous outlook for the full year, while noting that it "faces a challenging business environment with increasing risk due to general macroeconomic weakness, continuing competitive pressures and potential of further reduced capex spending by key North American CDMA customers."
Percentage growth in full-year revenue is forecast to be "in the low single digits," with gross profit margin of about 43 per cent of revenue.
